As the world’s top producer, importer and consumer of gold, China has baulked at having to depend on a dollar price in international transactions, and believes its market weight should entitle it to set the price of gold.

The new benchmark may not be an immediate threat to London, but industry players say over time China could set the price of the metal, especially if the yuan become fully convertible.

During an interview with Bloomberg TV Hao Hong, managing director and chief China strategist with Bocom International, one of China’s largest banks, put it more bluntly:

By trading physical gold in renminbi, China is slowly chipping away at the dominance of US dollars….The gold reserve on the China balance sheet has almost doubled since 2009. By holding gold, and moving away from a US-dollar centric system, we actually require less US dollars.

Of course the true measure of China’s gold holdings is still a closely guarded secret by the Chinese government. While the country has taken steps to increase transparency in its reserved reporting, which bolstered their successful campaign to have the yuan factored into the IMF’s Special Drawing Rights, James Rickards explains:

[T]hese figures are misleading because China keeps several thousand tonnes of gold “off the books” in a separate entity called the State Administration for Foreign Exchange (SAFE). Small amounts are transferred from SAFE to PBOC monthly, and that becomes the basis for the official reserve reports.

Along with bolstering their gold holdings, China has reformed its banking system to be friendlier to gold trading. In 2012, China announced interbank gold lending, to ease the exchange of gold between Chinese banks. China’s growing interest in gold’s value as money shouldn’t come as a surprise considering the Wall Street Journal, a few months later, reported that the works of Hayek and Rothbard were being read by Communist Party officials in the country.

So while, in spite of Ben Bernanke’s assurances to the contrary, it is clear that China still sees gold as money. And, as Rickard’s argues in his new book The New Case for Gold:

Despite disparagement by policy makers and economists, it will remain as a store of wealth par excellence, and continue to play an integral part in the world’s monetary system.